Banks should fully disclose to customers the impact of switching from a tracker mortgage, the Financial Regulator said today.
The regulator and the Central Bank today published a report on switching practices related to tracker mortgages by lenders.
It identified a number of concerns about the level of disclosure and transparency provided to consumers moving from a tracker rate mortgages to other home loans.
It found that in some cases it was not always made clear that if a customer moved from a tracker rate mortgage to an alternative interest rate, the tracker rate or an alternative tracker might not be available again in the future.
"Customers must be notified that switching from a tracker rate may mean they will lose the ability to avail of a tracker rate mortgage in the future, where this is the case," the regulator said in a statement.
Tracker mortgages have been an unprofitable product for banks.
Regulators said they were considering the use of a "cooling off" period for consumers who switched mortgages as part of the review of the Consumer Protection Code.
The review also uncovered no evidence that banks were offering customers incentives to move from tracker mortgages, but warned banks thinking of doing so to give it careful consideration and ordered that they be notified in advance.
The Central Bank said today that while banks would not be forced to adopt its suggestion yet, the measures were being considered as part of the proposed Consumer Protection Code.
The regulator's report was welcomed by Fine Gael housing spokesman Terence Flanagan, who said his party was backing the introduction of a cooling off period.
"The findings have shown that it was not always possible for a customer to know whether a move from a tracker to an alternative product at a fixed or variable interest rate means that their agreed tracker rate is not available to them in the future," he said.
“As a result of today's findings, mortgage lenders have to, with immediate effect, advise the customer of the advantages and disadvantages of both tracker rate mortgages compared to other rates being offered and what the costs are for the customer."
